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Jobs Report Sparks Rebound as Unemployment Hits Five-Year Low

NEW YORK ( TheStreet) -- Markets closed higher Friday as unemployment sunk to a five-year low while improved consumer spending bolstered confidence the market will be able to weather an early Federal Reserve tapering. In short, a very good day for equities.

The S&P 500 finished up 1.12% to 1,805.09 - breaking a five day losing streak - while the Dow Jones Industrial Average was up 1.26% to 16,020.20. The Nasdaq was 0.73% higher at 4,062.52.

Around 203,000 jobs were created in November, according to the Bureau of Labor Statistics. That's up from a revised 200,000 in October and better than the consensus 180,000 estimate coming from a Thomson Reuters poll of economists. The jobless rate fell to a five-year low of 7% from 7.3% versus the expectation for a dip to 7.2%.

Here's the unemployment picture over the last decade:

The Federal Reserve should start to wind back its $85 billion monthly bond purchase program, Charles Plosser, president of the Philadelphia Federal Reserve Bank told CNBC on Friday. "It would be wise if we began to get rid of this program - I don't think it is doing very much good [and] has a lot of potential unintended consequences and risks to the economy down the road," Plosser said.

Personal spending gained 0.3% in October, better than the consensus 0.2%, according to the Bureau of Economic Analysis. Personal income was down 0.1% in October, which was below the estimate of 0.3%.

"The increase in November's non-farm payrolls, along with the drop in the unemployment rate to a five-year low of 7.0%, gives the Fed all the evidence it needs to begin tapering its asset purchases at the next FOMC meeting later this month," Paul Ashworth, Capital Economics chief US economist told clients in a note.

In stock news, video-game maker Electronic Arts(EA) closed 5.9% higher as one of the top gainers in the S&P 500 after saying it was attempting to fix bugs in its "Battlefield 4" game. Big Lots(BIG) dived 12.5% after the retailer missed expectations for quarterly earnings and cut its full fiscal year outlook. J.C. Penney(JCP) shed 8.7% after announcing late Thursday the Securities and Exchange Commission was looking into its cash position and debt financing.

December consumer confidence rose more than expected to its highest level in five months. The Thomson Reuters/University of Michigan preliminary December consumer sentiment index notched 82.5 from 75.1 in November.